EUROPE, U.S. EXPAND RUSSIA SANCTIONS: The U.S. and the European Union have adopted sweeping economic sanctions against Russia to punish Moscow’s unbending stance in the Ukraine conflict. Now the question the West faces is whether the move will make Russian President Vladimir Putin more cooperative, or prompt him to dig in. The trade and investment restrictions that EU governments agreed upon mark a major escalation of sanctions against Russia, which could increase financial strains in its already sluggish economy.

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President Barack Obama stressed that the rift with Russia is “not a new Cold War.” But the U.S. announced sanctions similar to the EU’s against Russian banks as well as the energy, arms and shipping sectors. Some Western officials say they don’t expect Mr. Putin to withdraw his support for pro-Russian rebels, who are widely suspected of having shot down a Malaysia Airlines jetliner over eastern Ukraine on July 17 and are under growing military pressure from Ukrainian government forces. European officials say they don’t expect the Kremlin to make a quick about-face, but they hope the tightening economic squeeze will dissuade Mr. Putin from escalating the conflict and eventually push him to the negotiating table. Marcus Walker, Matthew Dalton and Carol E. Lee report.

WSJ STORIES YOU SHOULDN’T MISSOBAMA WEIGHS FEWER DEPORTATIONS: President Obama is considering broad action to scale back deportations that could include work permits for millions of people—a reversal to the stance he held for months that there were limits to his power to protect people living illegally in the U.S. from deportation. That shift, which comes after House Republicans said they wouldn’t take up immigration legislation, would please Hispanic Americans and immigrant-rights advocates, but it would certainly anger Republicans, who say Mr. Obama has already overstepped his authority. Laura Meckler reports. House Republicans, meanwhile, unveiled a bill that would provide $659 million to help deal with the influx of children crossing the border.

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SENATE PASSES HIGHWAY BILL:The $8.1 billion measure passed by the Senate yesterday to replenish the fund that pays for highway and bridge repairs takes a different approach from the House and creates last-minute trouble for legislation that Congress must pass in the next several days to prevent the fund from becoming depleted. The Senate bill would extend the fund through Dec. 19, while the House bill would take funding through May. That, in addition to other amendments, creates new tension with the House, whose members thought they had finished their work on the bill. Siobhan Hughes reports.

REGULATORS SAY EPA RULE POSES CHALLENGES:President Obama’s proposed rule to curb carbon emissions from the nation’s power plants could raise costs and affect reliability in the U.S. electricity system, federal regulators told Congress. But they also said the government has a responsibility to act on climate change. Utility companies are already shifting away from coal because of the natural-gas boom and other regulations, but the rule is expected to accelerate the trend. That could put pressure on a grid that has been dominated by coal-fired plants. Amy Harder reports.

SEIB VIDEO: U.S.’S OPTIONS IN HELPING UKRAINE
After many European countries along with the U.S. stepped up sanctions against Russia, several challenges now arise as to how to maintain stability in Ukraine. WSJ’s Jerry Seib explains the line the U.S. government must now walk in order to both punish Russia and help Ukraine.

HERE’S A LOOK AT THE DAY AHEAD
–GDP: Economists will get their first peek at how the U.S. economy fared in the second quarter, an important gauge of where the country is heading after the abrupt downturn in output during the first three months of the year. Here are five things to watch.

–CONGRESS: House Republicans plan to push ahead with their effort to sue the president for taking unilateral action to delay the health law’s employer mandate, with a vote expected today. The House Ways and Means Committee will hold a hearing on Chairman Dave Camp‘s tax-reform plan and its impact on the economy.

WHAT WE’RE READING AROUND THE WEBAaron David Miller, writing in Foreign Policy declares Hamas the winner of “round one” in the bloody battle of Gaza. The group’s “main goal is keeping both its military and political leadership intact, and not giving into Israel’s superior firepower. Indeed, in a way Hamas wins just by not losing.”

Completing a bill to keep the nearly depleted highway trust fund solvent ”is a test for the current Congress on whether it can barely inch over the bar of acceptable performance,” writes Norm Ornstein in National Journal. A “bigger test,” he writes, is whether lawmakers can come up with a stronger long-term plan to fix America’s needy infrastructure, which would be “clearly the best investment the country can make.”

The re-election effort of Republican Sen. Lamar Alexander, writes Dan Balz of the Washington Post, is a test of whether Tennessee voters will continue their history of electing “a succession of Republicans to statewide office who are more problem-solvers than ideologues, consensus-seekers rather than rabble-rousers.”

In WSJ’s Think Tank, Peter Wehner writesthat the push to legalize marijuana is at odds with current scientific knowledge, which finds today’s pot increasingly potent and a demonstrated threat to brain development.

@CoryBooker:I hate to tell u this Rand but I think we were late pity adds 2 this list of the young & gorgeous

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Washington Wire is one of the oldest standing features in American journalism. Since the Wire launched on Sept. 20, 1940, the Journal has offered readers an informal look at the capital. Now online, the Wire provides a succession of glimpses at what’s happening behind hot stories and warnings of what to watch for in the days ahead. The Wire is led by Reid J. Epstein, with contributions from the rest of the bureau. Washington Wire now also includes Think Tank, our home for outside analysis from policy and political thinkers.